Oil producers in Alberta are giving up $18 billion a year by selling barrels of Canadian oil priced substantially lower than international crudes and the losses are poised to continue into 2014, CIBC World Markets said Monday.
Canadian conventional and unconventional oil production is expected to rise by about 30 per cent to almost four million barrels per day by 2016 said Bentek analyst Adam Bedard.
Reduced refining capacity for light oil as companies shift toward heavier slates will add to the backlog of Canadian barrels, with discounts to WTI expected to deepen to $27 U.S. per barrel by 2014, Bedard said.
"Currently pipeline take away capacity is precious, and what is happening in Canada and the U.S. is unconventional will grow quickly and compete for the space," Bedard said.
Supply growth in Canada and the United States is overwhelming pipeline expansions and additions such as the Seaway pipeline and TransCanada Corp.'s Keystone XL, projects set to add almost one million barrels per day capacity out of Cushing.
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